Accountants and the gig economy

It’s becoming more common for workers to take a freelance “gig” rather than a permanent job. What does this mean for accounting?

The nature of work is changing and the accounting profession is going to have to change with it, according to experts in workplace evolution.

Australian Bureau of Statistics data show that 9 per cent of people work as freelancers, and 30 per cent of all workers engage in some form of freelance work, or take on “gigs”.

“Freelancers have always been a part of the workforce but the strong growth we have seen in the past decade is underpinned by advances in technology that make it not only possible but inevitable,” says Steve Sammartino, an author and futurist who will speak on the subject at CPA Congress in October.

“For employers, it can be much more cost-effective to hire skills on an as-needed basis rather than recruit full-time employees, with all the on-costs that that entails,” he adds.

The gig economy means rethinking work

The shift to the so-called “gig economy” has taken on a new momentum with the rise of intermediaries such as Airtasker, Upwork and Freelancer.com.

These link freelancers seeking work with employers, even if the employers are small companies or individuals who need a job done.

High-profile organisations such as ride-service Uber have given another dimension to the freelancing idea.

Airtasker advertises that it can provide freelancers for everything from installing software to doing housework.

Accountants and Airtasker

Will this model work for the high-value advisory or business planning work that accountants do?

Airtasker includes accountants in its list of available people, although most offer services in areas such as bookkeeping, tax preparation and routine compliance.

This does not surprise Sammartino. “Generally, what we have seen is that it starts with fairly straightforward activities,” he says.

“But it doesn’t stay there for long. You soon see more sophisticated services being offered, and freelancers marketing themselves on their reputation. In fact, reputation is an important part of this.”

A freelancer can easily provide recommendations and testimonials from satisfied clients, and they can link to their website to show their credentials and expertise.

Will gig workers replace permanent staff?

Sammartino says that employers can pay freelancers more on a per-task basis because they offer a lower cost structure than permanent employees.

“It can even work out better for them to hire an accountant to perform tasks that come up only occasionally than buy software and train their own staff on how to use it.”

Other commentators are more wary of the risks that freelance gigs can involve.

Associate professor Sarah Kaine of the University of Technology Sydney points to her research showing that most freelancers struggle to make an income equivalent to a full-time wage.

“There is a much higher degree of negotiation involved here,” she says.

That can work for a professional offering high-value services, but someone lower down the scale, in a very competitive market, can find themselves in a race to the bottom.

“Freelancers in this position will have to find ways to leverage their assets,” says Kaine.

Some clients, for example, might want to work with someone who is local and understands the issues of the community. “That can be a valuable selling point,” she says.

Freelancing for retired accountants

Kaine notes that freelancing often means insecurity of income, but it can also provide flexibility.

This can be important to someone who has family commitments, and gig workers often arbitrate between the costs and benefits of the work.

Gigs can also be a stopgap measure until a full-time permanent job comes up.

“People who have retired – and this is especially relevant to accountants – but want to continue to utilise their skills for some extra income, might find that occasional freelance work suits them,” says Kaine.

Can gig workers be exploited?

There are also dangers. The nature of freelance work means that legal recourse is difficult if payment for a task performed is not made as agreed.

Another risk may be that the freelancer is actually an employee, says Mark Scully, Deputy Fair Work Ombudsman.

“While independent contracting may be an entirely legitimate way to get work done, businesses need to think about whether the true nature of the relationship is one of employment,” he says.

When employees are incorrectly classified as independent contractors, they miss out on a number of legislated protections and benefits, such as workers’ compensation and annual and personal leave.

“If a business is deliberately disguising what is an employment relationship as a freelancer or an independent contractor to save running costs, they run a risk of being pursued through the courts for sham contracting, which carries significant civil remedy penalties,” warns Scully.

In many cases, a freelancer might never meet the client in person. “The legal system hasn’t really caught up with these changes yet,” says Kaine. “So there is the possibility for exploitation.”

There are also questions of liability. If a provider like Airtasker organises a freelancer and the job is done badly, or even creates a risk, where does responsibility lie?

These issues are not clear.

The gig economy will continue to grow

Nevertheless, Kaine believes that the gig economy will continue to grow. “We will probably see hybrid forms developing,” she says.

Employers will increasingly use a mix of permanent employees and freelance workers.

Freelancers, especially professionals, will mix independent work with full-time employment over the course of their careers.

It’s not new, but it will become common, says Kaine.

Steve Sammartino agrees, and adds that professional organisations might have to consider a new form of designation for gig workers to recognise the changing reality. Accounting and legal bodies, for their part, may need to review the requirements of their members to hold practice certificates.

“Reputation, certification and qualifications are going to be increasingly important for freelancers, as well as for the people who engage them,” says Sammartino.

“Whether the existing system will continue to be appropriate is something to think about.”